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Facing sleepless nights due to the complex and tiresome online NBFC registration process? Let our experts at Enterslice simplify the process for you.
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If you are an entrepreneur who wants to explore business opportunities in the financial sector, NBFCs offer a profitable option. NBFCs are financial institutions that provide loans and other financial services but do not operate like traditional banks. They don’t have a banking license, so they can’t offer savings accounts to their customers.
Since 2020, NBFCs have been doing better than banks. As of September 2023, NBFCs have a 41% share in the microfinance sector of India, making them a good investment business. Another reason is that NBFCs don’t need to follow strict compliance like banks. They play an essential role in India's economy.
Fill the credit gap through loans
Support borrowers failing to get bank loans
Finance MSMEs & start-up ecosystem
Create employment opportunities
Invests in high-risk, long-term infra projects
Facilitate economic growth & development
The role of NBFCs in India's financial sector is essential. They offer various services, such as loans, asset financing, and investment management, to individuals and businesses that are not served by traditional banks. NBFCs are classified into different types based on their functions and activities for NBFC registration.
ICCs offer businesses and individuals financial services, including loans, investments, and credits. They play a crucial role in boosting credit availability and enabling financial inclusion across different sectors.
IFCs are focused on funding large infrastructure projects. They support long-term investments by financing the development of necessary infrastructure, such as highways, ports, and energy systems.
CICs mainly invest in the securities of their group companies. They hold at least 90% of their invested assets through such investments. They also support the growth and development of partnerships via capital management.
IDF-NBFCs specialize in directing investments into infrastructure debt. They finance long-term infrastructure projects through bonds and support essential sectors like energy, transport, and urban development.
MFIs are known for offering collateral-free small loans to low-income individuals and groups. They strive to empower underserved communities through financial support that helps them fulfil their personal and business needs.
Factoring NBFCs buy receivables from businesses, enabling instant cash flow. They help businesses manage their working capital by converting outstanding invoices into liquid assets, boosting operational efficiency.
MGCs offer mortgage guarantees, lowering lenders' risk. These guarantees facilitate home loan approvals and stimulate the housing sector's growth, particularly for first-time buyers.
P2P lending platforms connect individual borrowers and lenders digitally via the Internet, bypassing traditional banks. They offer dynamic interest rates and flexible terms, encouraging alternative financing alternatives for borrowers and investors.
NBFCs in India are classified based on the regulatory norms set by the RBI. However, each category is subject to different compliance needs. Types of NBFCs based on regulatory norms of the RBI include the following.
NBFC registration online in India has various benefits not just for the Indian economy but also for entrepreneurs and NBFCs themselves.
By offering credit to underserved markets, your NBFCs promote financial inclusion and contribute to the country's economic growth.
Registered NBFCs give entrepreneurs a source beyond traditional banks to fund their business, thus promoting innovation.
Your NBFCs actively support overall economic growth and development by funding small businesses and infrastructure projects.
By registering your NBFC, you adhere to RBI compliance and boost your NBFC's market credibility, helping you attract more clients.
Your NBFC enables a wide range of financial services, including loans, investments, and asset management, which adds to the country's diverse financial landscape.
As an entrepreneur, it's important to note that the NBFC registration procedure in India is a time-consuming process. The authorities typically take around 180 working days to issue the NBFC license. However, if the process is not followed or if the application form is incomplete, your process to register NBFC with RBI can get delayed, and you may not be able to receive your NBFC license from RBI within the given time limit. The step-by-step guide to complete the process to register NBFC in India:
The first step is to register your company under the Companies Act, 2013. Secure a Certificate of Incorporation (CoI) from the Registrar of Companies. You must have the 10 crore as paid-up capital.
You must submit a duly filled application form with all the correct details and then proceed to register NBFC.
You need to create a detailed business plan to register NBFC with RBI, including a summary of how you plan to operate it and make money from it. Once the plan is ready, submit it to the RBI.
Once you have submitted your application, the RBI reviews it to check if the details entered are correct and complete. The review ensures that you meet the required compliance.
You must also collect all required documents to be submitted to the RBI. Documents like PAN Card, KYC, MoA, and AoA serve as proof of identity for you and your business.
Once your application is reviewed and documents verified by the RBI, the NBFC registration certificate will be issued. Once you receive your RBI license for NBFC, you can legally start your business operations.
NBFC license registration in India is a complex and lengthy process. The estimated time required for NBFC registration procedure takes between 90 to 180 working days to complete with guidance by our Enterslice team. Timeline details are given below:
The most critical steps for entrepreneurs are to register their company and open a bank account for their business. Both these steps take around 15 days to complete.
The next step for an entrepreneur is to prepare a detailed business plan, which includes business objectives, financial projections, an HR plan, and risk management. This step can take up to 15 days to complete.
Next, you must inject the required money into the business to comply with RBI guidelines and show that you have the amount necessary to run your NBFC business. You must also collect the essential documents to be submitted along with your application.
Next, RBI accepts your application to register your NBFC and shares its feedback, allowing you to proceed to the next step in your NBFC registration process.
First-level approval indicates that RBI has reviewed your NBFC registration application and is satisfied with it, which allows you to move on with your registration process.
NBFC registration requirements include submitting the following documents:
KYC – Directors & Shareholders
Professional Background of Directors and Shareholders
Certified Memorandum and Articles of Association
Credit Reports – Directors & Shareholders
Confidential Banker’s Report- Directors & Shareholders
Duly Attested Highest Education Certificate Copy
CA certified Net Worth – Directors & Shareholders
CA Certified Capital Structure of the Company
Banker Confirmation – Rs. 10 crores FD in the NBFC's account
Board-approved Business Plan
Board-approved Financial Projections
Board-approved Credit Policy
As an entrepreneur, you must know the importance of NBFC license from RBI in the financial sector. Getting an NBFC license certificate helps it operate within a regulated framework. It is also essential in building trust and credibility. NBFCs cater to urban and rural sectors, offering loans and financial services to the unorganized sector to promote inclusive growth. NBFCs contribute significantly to bridging the gaps by traditional banks by providing financial services to small businesses and individuals with limited access to financial products.
NBFC registration also supports economic growth by facilitating your company's offering of various financial services such as loans, investments, and asset management. NBFCs significantly impact the financial market's stability because they can manage different risks by operating as a financial intermediary. NBFCs also promote the growth of small-scale industries, creating job opportunities.
NBFCs also provide higher deposit rates, helping mobilize public savings into investments. NBFCs adhere to RBI guidelines to maintain transparency and stability, promoting an inclusive and robust financial ecosystem.
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Your NBFC can play an essential role in the financial market by offering various financial services to promote the country's economic growth. The primary function of an NBFC with a NBFC license certificate is to contribute to the financial sector's overall growth. You contribute significantly as an entrepreneur by serving the unserved markets and promoting financial inclusion by making your offerings available to unorganized and small-scale industries.
You can also facilitate the growth of individuals without access to traditional banks through loans and other financial offerings. You can also offer investment services and manage assets, helping your clients grow their wealth. Overall, your services can help your NBFC meet its functions and contribute to India's economic growth.
Extend loans & credit to individuals and businesses in areas underserved by banks, facilitating financial inclusion.
Offer investment products & financial planning services to handle and boost your clients' assets through investment options.
Offer asset management services to help individuals and businesses streamline the return on their investments.
Offer various financial services to underserved markets, boosting access to financial products and facilitating financial inclusion.
Talk to Enterslice consultants, and let us help you overcome the challenges with minimum effort.
As an entrepreneur, you must ensure that your NBFC adheres to all mandatory rules, regulations, laws, and compliances, as violations can lead to penalties and impact its operations and reputation. The RBI has strict benchmarks to ensure that NBFCs follow all regulatory requirements.
The penalties for non-compliance with NBFC registration guidelines are listed below for your understanding:
As an entrepreneur you need to follow the eligibility criteria guidelines set by the Ministry of Corporate Affairs and the Reserve Bank of India for your NBFC registration online in India:
Checklist for the NBFC License from RBI
Checklist for Directors & Shareholders for NBFC Registration
Since 2020, the RBI has introduced various mandatory post-registration compliances for NBFC license certificate, which include the following:
Non-Banking Financial companies play an important role in the financial ecosystem of India. While banks offer conventional services to their customers, importance of NBFCs in providing flexible services can’t be ignored. So, if you’re an entrepreneur looking for more flexible, balanced or inclusive financial services, you can explore various NBFCs. We have explained the difference between NBFCs and Banks in the table below:
As a consulting firm for NBFC registration online, Enterslice brings over 10+ years of industry experience in NBFC license registration. Our experts are well-versed in the process and can efficiently guide you through it, ensuring all regulatory requirements are met. Reasons why you should choose us for your NBFC License from RBI:
The full form of NBFC is Non-Banking Financial Company. NBFCs started operating in India in the 1960s after the Reserve Bank of India modified the Reserve Bank of India Act, 1934, in December 1964.
Some of the challenges faced by the NBFCs during the NBFC registration process include the following:
Registered NBFCs are regulated by the Reserve Bank of India (RBI) under Chapter III B of the Reserve Bank of India Act, 1934.
An NBFC license certificate is permission from the Reserve Bank of India, allowing an NBFC to operate its business legally like a bank without needing a full banking license.
To get your RBI license for NBFC registration online, you need to follow all the regulatory and legal compliance, clear the eligibility criteria, submit the required documents and wait for approval.
Some of India's top non-banking financial companies (NBFCs) include:
The NBFC registration cost in India includes registration fees, legal charges, compliance costs, and capital requirements. Your cost can increase if you avail yourself of the services of NBFC registration consultants. However, the total cost of obtaining the license can vary depending on various factors. You can contact us to know more.
The role of NBFCs in the Indian economy is as follows:
Online NBFC registration is essential for its convenience and ease. It streamlines the application process, simplifies the procedure, reduces the paperwork burden, and speeds up approval.
NBFCs are required to meet several eligibility criteria, including obtaining a certificate of NBFC registration from the RBI.
NBFC is required to follow the new RBI guidelines for NBFC registration online related to:
According to the available data, as of September 2023, NBFC microfinance organizations comprise 41% of the market share in India's microfinance sector, with banks accounting for 30%. It is noteworthy that since 2020, NBFCs' market share has grown considerably.
An NBFC should have a minimum net-owned fund of at least Rs. 10 crores to be eligible for NBFC registration online.
Some of the limitations of NBFCs include the following:
NBFCs are managed by the Ministry of Corporate Affairs, Government of India. However, they are simultaneously regulated by the Reserve Bank of India.
NBFCs have to comply with the qualifications of directors for their organization, including:
While a private limited NBFC must have two directors on board, having at least three to four directors is advisable. The directors should come from a combination of three Sectors: Banking, Finance, and Information and Technology (IT).
Yes, RBI approval is required to appoint a director in an NBFC for NBFC registration. The RBI must endorse the appointment to ensure the director meets all regulatory and fit-and-proper criteria.
The fit and proper criteria set by the RBI for NBFC registration ensure that individuals appointed to key positions within an NBFC meet specific suitability standards, including a clean legal and financial record, relevant experience and qualifications, and financial soundness.
As per the data available, on average, NBFC director in India draws a salary ranging between ₹ 24.0 lakhs to ₹ 90.0 lakhs, with an average annual salary package of ₹ 43.5 lakhs.
Minimum requirements for NBFC company registration include:
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